FINWIRES · TerminalLIVE
FINWIRES

Estee Lauder Likely to Issue Fiscal 2027 Guidance In Line With Preliminary Outlook, RBC Says

By
Estee Lauder Likely to Issue Fiscal 2027 Guidance In Line With Preliminary Outlook, RBC Says

Estee Lauder (EL) is likely to provide full-year guidance in line with its preliminary expectations, as most factors underpinning the outlook remain intact, RBC Capital Markets said in a Monday client note.

In May, the cosmetics company said its preliminary forecast for fiscal 2027 was for sales to grow between 3% and 5% and its operating margin to be in a range of 12.5% and 13%.

At the time, the guidance reflected growth acceleration in Estee Lauder's global prestige beauty segment, no business disruptions from the US-Iran war, no tariff-related impacts and no deterioration in the geopolitical situation and consumer sentiment, according to RBC. The brokerage believes Estee Lauder's outlook will fall within the original range as the initial assumptions remain "largely intact."

"Depending on the timing and magnitude of tariff refunds, (Estee Lauder) may see a one-time margin bump, but we would expect EL to reinvest back into the business to further bolster the top-line," RBC's co-head of global consumer and retail research, Nik Modi, said in the note.

Estee Lauder is scheduled to release its latest quarterly and full-year results this week.

RBC estimates the cosmetics company to deliver fourth-quarter per-share adjusted earnings of $0.30 and revenue of $3.49 billion, compared with the Street's view for $0.32 and $3.55 billion, respectively.

Companies across the beauty, luxury and retail industries have seen mixed quarterly results, but "lean slightly positive" for Estee Lauder, according to the brokerage. Hard luxury companies such as Richemont and Swatch and beauty giants like L'Oreal, e.l.f. Beauty (ELF) and Ulta Beauty (ULTA) recorded robust growth, while premium beauty in core Europe was mixed and the Middle East war remained a headwind, RBC added.

The brokerage believes Estee Lauder remains actively engaged in merger and acquisition opportunities, with the execution of its profit recovery and growth plan potentially giving the company greater capacity to pursue larger transformational deals that fit its portfolio.

In May, Estee Lauder and Spanish beauty company Puig said they ended discussions over a potential business combination. Estee Lauder at the time said it would continue to evaluate potential acquisitions and divestitures.

RBC maintained its outperform rating on Estee Lauder's stock with a price target of $111.

"We believe that (Estee Lauder) shares are undervalued when considering cost-cutting initiatives, recovering top-line, and the current turnaround momentum," the brokerage said.

Related Articles

Kweichow Moutai Profit Slips as Rising Production Costs Weigh on Revenue
US Markets

Kweichow Moutai Profit Slips as Rising Production Costs Weigh on Revenue

Kweichow Moutai (SHA:600519) reported a slight drop in first-half profit as rising production and input costs weighed on margins even as sales volumes and revenue grew.The baijiu liquor manufacturer's attributable net income slipped 1.95% year over year to 44.5 billion yuan, or 35.57 yuan per share, according to a Shanghai bourse filing over the weekend.Revenue inched up 1.47% year over year to 90.7 billion yuan on the back of increased sales volume during the reporting period.However, operating costs climbed faster than sales, up 21.8% year over year, which Moutai said reflected both the higher volume and increased production costs.Domestic sales accounted for the large majority of revenue at 89.6 billion yuan, compared with 1.04 billion yuan from overseas markets.Research and development spending also jumped 55.5%, which the company linked to increased investment in capitalized projects, while finance expenses fell as bank deposit rates declined.Last month, the company raised prices on its flagship Feitian 53% 500-ml baijiu liquor product by 100 yuan per bottle. The iMoutai platform retail price increased to 1,639 yuan per bottle, while the contract sales price rose to 1,369 yuan per bottle.Moutai said its first-half performance demonstrated its "resilience," despite the liquor industry undergoing "profound cyclical and structural adjustments" and amid increasing market competition.The distiller produced 41,000 tons of its Moutai-branded liquor and 31,000 tons of series liquors in the first half.Elsewhere in the company's first-half results, Moutai said its domestic dealer network saw 220 dealers added and 266 removed during the period, primarily among its wine series liquor dealers, leaving 2,307 domestic dealers. Its overseas dealer count stood at 119, with 14 added and 21 removed.

SHA:600519
New Zealand Service Sector Expands in July, Employment Struggles
US Markets

New Zealand Service Sector Expands in July, Employment Struggles

New Zealand's services sector showed expansion for a second consecutive month in July but without any sign of acceleration, weighed down by contraction in employment and supplier deliveries.The BNZ BusinessNZ Performance of Services Index (PSI) for July was 50.6 in seasonally adjusted terms, above the 50 mark that indicates expansion but slightly down from 50.9 in June.New orders/business was the strongest sub-index at 52.6, up from 53.3 in June, while employment remained in contraction at 48.5, down marginally from June's 48.8 reading.The report said that there is little chance of the unemployment rate falling until meaningful services job growth returns, given the size of New Zealand's services sector.The supplier deliveries sub-index fell into contraction with a reading of 48.5, down from 51.2 in June."The positive take is that this represents progress, with the past two months having shown better readings than for most of the past three years. Moreover, the activity/sales index rose above 50 for the first time in six months," said BNZ Senior Economist, Doug Steel.The BusinessNZ Performance of Manufacturing Index (PMI) report on Friday showed that the manufacturing sector expanded with a reading of 54.3, below June's 60.1 reading but above the survey's long-term average of 52.5.BusinessNZ Performance of Composite Index, which combines the PMI and PSI, was at 51.1 in the gross domestic product-weighted Index and 52.6 in the free-weighted index, compared to 51.6 and 53.8 in June, respectively.

^NZ50
Update: S&P Logs Third Consecutive Weekly Gain Despite Pullback From Record High
US Markets

Update: S&P Logs Third Consecutive Weekly Gain Despite Pullback From Record High

(Updates with market moves at the end of the day, and other changes, if any.)The S&P 500 retreated Friday from an all-time peak in the previous session, following downbeat retail sales and consumer sentiment reports, but still logged its third consecutive weekly gain.The index fell 0.2% to close at 7,785.76. The Nasdaq Composite declined 0.3% to 26,729.16, snapping a two-day advance, while the Dow Jones Industrial Average edged down 0.2% to 53,732.41. Among sectors, healthcare led the laggards, while energy paced the gainers.This week, the S&P 500 gained 0.4%, while the Nasdaq added 0.1%, both marking their third weekly advance in a row. The Dow lost 0.6% following two straight weeks of gains.Retail sales in the US unexpectedly decreased last month, registering the largest monthly drop in more than a year, amid declines in spending on motor vehicles and at gas stations.US consumer sentiment fell in August after two straight monthly gains amid continued inflation concerns, while year-ahead price growth expectations rose, preliminary results of a University of Michigan survey showed Friday.The reports follow official data on Thursday that showed producer prices held steady last month, defying expectations for a monthly rise. Earlier in the week, the Bureau of Labor Statistics published benign consumer inflation data for July that lowered bets for a Federal Reserve interest-rate increase next month."American consumers took a breather last month, despite the tailwind from rising equity markets," Sal Guatieri, senior economist at BMO Capital Markets, said in a report, discussing the retail sales report. "This, together with a weaker jobs report and subdued core CPI inflation, raise the odds of the (Federal Open Market Committee) staying patient again in September."Markets are currently pricing in a 67% probability that the Fed will keep its benchmark rate steady next month, with the remaining odds in favor of a 25-basis-point hike, according to the CME FedWatch tool.Treasury yields were higher, with the 10-year yield rising 4.7 basis points to 4.69% and the two-year yield up 2.7 basis point at 4.17%.West Texas Intermediate crude oil was up 1.3% at $82.32 a barrel in Friday late-afternoon trade, while Brent advanced 1.7% to $88.51. Both benchmarks were on track for weekly gains following two consecutive weekly declines.In an interview with Newsmax, Treasury Secretary Scott Bessent said the US will continue its blockade of Iranian ports, according to CNBC."Crude continues to gyrate on headlines surrounding the Strait of Hormuz, with traders caught between expectations that an eventual agreement could release additional Gulf barrels and the reality that six months of disruption have left global inventories depleted," Saxo Bank said in a report on Friday.Shares of Applied Materials (AMAT) slumped 5.1%, the third-steepest decline on the S&P 500, after the semiconductor-equipment manufacturer reported lower free cash flow for the first nine months of the fiscal year as capital expenditures climbed sharply.Reddit (RDDT) jumped nearly 13%, with the social media platform set to join the S&P 500 on Tuesday.Fox class B shares (FOX) rose 5.7%, among the best performers on the S&P 500, following a rating upgrade from Wells Fargo. Its class A shares (FOXA) advanced 5.5%.Spot gold climbed 0.6% to $4,374.30 per troy ounce.

Dow JonesNasdaq CompositeS&P 500$AMAT$FOX$FOXA$RDDT